Retirement and life insurance: Should you make changes?

Getting ready for retirement is like entering a brand-new phase of life. But along with this change, it’s time to take a closer look at that reliable life insurance policy you’ve had for a while. 

You might be wondering, “Should I make some adjustments to my coverage?” “Is my policy keeping up with the times?” or “What’s the deal with my beneficiaries?” 

Today we’re answering nine common questions about retirement and life insurance considerations that you should be able to relate to whether you’re pre-retirement and planning ahead or already enjoying the retired life. 

We’ve even added some hypothetical and interesting stats to spice things up. Let’s dive in!

1: Why do I need to reconsider my life insurance needs as I approach retirement?

As you near retirement age, your financial landscape can undergo significant changes. Your income, expenses, and dependents may shift, making it important to take a new look at your life insurance to keep it aligned with your current and future needs.

  • Example: Susan, 68, has a successful husband who is eight years younger and two adult children who have graduated and are financially independent. Reassessing her life insurance revealed that she could reduce her coverage, saving her money in premiums while still ensuring future financial protection for her spouse.

2: How does retirement affect what I need in terms of life insurance?

Retirement often means a reduction in income — if not entirely, then at least partially, as full-time workers might take on consulting or part-time employment. There’s also the winding down of some financial responsibilities, like mortgages and children’s education. 

This shift may influence the amount of life insurance coverage you need. When evaluating these changes, see to it that your policy will adequately protect your loved ones in your absence.

  • Stat: A study revealed that over 50% of retired Americans currently live on less than 50% of their pre-retirement annual income, making it essential to square your life insurance policy with your new financial landscape (Source: GSAM).

3: Should I consider switching up my life insurance beneficiaries when I retire?

If necessary, absolutely. As life unfolds, so do friendships, relationships and family dynamics. Some people also leave charitable organizations and alma maters in as life insurance beneficiaries, and the importance of those might also ebb and flow. 

That’s why it’s a good idea to review and update your beneficiaries to reflect the changes in your personal life. That way, you can rest easy knowing that your policy will pay out to those you’ve intended.

  • Example: Tom, 65, updated his life insurance beneficiaries after his divorce to ensure that his benefits would go to his children rather than his ex-spouse. He also carved out a portion for ongoing support to a local homeless shelter, a cause he more recently became involved with.

4: How does life insurance fit into the picture when it comes to planning my estate during retirement?

Life insurance is a useful tool in estate planning because it acts as a financial support system. By providing liquidity, it addresses important aspects like estate taxes and outstanding debts. 

This proactive approach helps ensure that your loved ones don’t face unnecessary financial burdens during what is already a challenging time. It’s a practical way to safeguard their financial well-being and make the estate transition as seamless as possible.

  • Stat: Approximately 67% of Americans die without a will or estate plan, and that’s up from what it was pre-Covid. Many say it’s because they’ve been procrastinating, and others just don’t know where to start. If you don’t have a will, a probate court will refer to local “intestate succession” laws to decide who will receive your property. The order of succession usually prioritizes your surviving spouse or domestic partner, followed by your children, then parents, siblings, and extended family members. (Source: CNBC).

5: Will retirement affect my ability to handle life insurance premiums?

Retirement is often accompanied by a fixed income — dependent on how long you worked and at what age you decide to start taking on your social security benefits. You may also have some sort of pension that you can take advantage of. Altogether, it’s more than likely that this is significantly less than what you were earning at the highest-paid period in your life. 

So, while your overall expenses may decrease, it’s important to re-evaluate your budget to make sure you can still comfortably afford life insurance premiums. This might involve adjusting your coverage or exploring more cost-effective options.

  • Example: Being single, Mike, 68, reduced his life insurance coverage and opted for a policy with lower premiums to better calibrate with his (much lower) post-retirement budget.

6: Do I need to think about buying more life insurance when I’m retired?

It depends on your individual circumstances. Maybe you created your life insurance policy when you had two kids in college, and now, years later, they have families of your own, making you a mother-in-law (or father-in-law) and a grandparent. 

If you think that your existing coverage won’t sufficiently help out your expanded assortment of loved ones, purchasing additional life insurance may be a wise decision — if you can afford it.

  • Stat: A majority of Americans over age 25 (82%) think a typical term life insurance policy costs more than it actually does, potentially leading to inadequate coverage during retirement (Source: Forbes).

7: How do changes in my health as I get older affect my life insurance?

Your health plays a big role in how much you pay for life insurance. If your health has improved since you initially purchased your policy, you may qualify for lower premiums. Conversely, if your health has declined, it’s important to weigh the impact on your coverage and premiums.

  • Example: At age 70, Martin noticed his balance was a little off and was more tired than usual. He decided to rethink his life insurance and made a few tweaks to make sure he still had the right coverage, even if it meant paying a bit more. This choice gave him peace of mind, knowing his wife’s money matters would continue to be taken care of.

8: What should I know about long-term care insurance?

Retirement often coincides with an increased need for long-term care insurance. As you age, the likelihood of requiring assistance with daily activities rises. Assessing your long-term care needs and integrating them into your overall insurance strategy is essential for comprehensive coverage.

  • Stat: Nearly 70% of people aged 65 and above will need long-term care at some point, underlining the need to include it in your retirement planning (Source: AARP).

9: Can I use life insurance as a source of income in retirement?

Absolutely! Many don’t know that life insurance can also include living benefits, which means you can use the proceeds while you’re still alive. Some life insurance policies might serve as a source of income in retirement — like ones with cash value or permanent insurance, including whole life, universal, and variable life insurance policies. 

If the cash-value account grows, you can withdraw it as a retirement income source. And if you withdraw less than the amount you’ve paid in premiums, it won’t be subject to taxes. A financial advisor can guide you toward a plan that aligns perfectly with your retirement goals.

  • Example: Susan, 64, is happily retired and has a life insurance policy that’s accumulated a decent amount of cash value. When her granddaughter needed money for a down payment on a starter house, Susan used the cash value instead of taking a high-interest personal loan. While it’s a smart move to support her family today, Susan knows it will reduce what her beneficiaries get later on. 

Time to revisit your life insurance policy? 

Plenty of adults in the U.S. rely on life insurance from their jobs, and some even add an extra plan to fill in any gaps left by their employer’s coverage. 

But just having life insurance isn’t the whole story. It’s crucial to pick the right type and amount — and that can change as you slip into retirement age. 

Regardless, life insurance isn’t just another monthly bill—it’s an investment in taking care of your loved ones after you’re gone. So, nailing down the details is important. 

Unsure about when or if you should check up on your coverage? Let’s get you in touch with Ethos, a Guided Solutions partner, to see if you qualify for instant coverage — with no need for medical exams or blood tests. Plans start at just $7 per month. Take the first step! Find out more and apply today.


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